The Water Amendment (Restoring Our Rivers) Act 2023 inserted a new Part 5 into the Water Act 2007 (Cth) (Water Act), enabling the development of a mandatory code - the Water Markets Intermediaries Code (Code) and a statutory trust-accounting regime. Regulations made on 26 June 2025 prescribe the Code and provide for a two-stage commencement.
Key takeaways
The Code was introduced to improve transparency, integrity and client protections in the Murray-Darling Basin water markets.
Phase 1 of the Code commenced on 1 July 2025, which introduced principled conduct obligations on “eligible water markets intermediaries”. These obligations include dealing with clients in good faith, placing the client’s interests ahead of their own, acting in accordance with client instructions, disclosing conflicts of interest and operating trust accounts for client monies.
Phase 2 takes effect on 1 October 2025, adding more prescriptive obligations around disclosure, written authorities, broking water accounts, complaints handling and record keeping.
This article provides an overview of the Code and highlights the practical steps intermediaries should take now to prepare for the commencement of Phase 2.
Background to the Code
In August 2019, the Australian Competition and Consumer Commission (ACCC) was directed to conduct an inquiry into markets for tradeable water rights in the Murray–Darling Basin. Its final report in 2021 recommended measures to improve the operation, transparency, regulation, competitiveness and efficiency of these markets. The findings informed the subsequent Water Market Reform: Final Roadmap, which made 23 recommendations, all supported by the Federal Government. Both reports emphasised the need to strengthen regulation of water market intermediaries.
To implement key reforms, the Water Amendment (Restoring Our Rivers) Act 2023 (Cth) was passed in December 2023, amending the Water Act 2007 (Cth) and paving the way for the Code.
Who does the Code apply to?
The Code applies to ‘eligible water markets intermediaries’. Broadly, this covers persons who, in exchange for a commission or fee, provide services connected with the trade of eligible tradeable water rights. This includes those who:
trade water rights on behalf of another party
investigate trading opportunities for existing or potential market participants
prepare documents necessary for the trade or transfer of water rights
operate a trading platform or water exchange
provide advice (other than general information) to market participants or potential participants in connection with water right trades
represent that a water right is available for sale or purchase and facilitate the trade or transfer.
These intermediaries may include:
water brokers
irrigation infrastructure operators
operators of online trading platforms or water exchanges
legal professionals
real estate agents.
Staged Introduction of the Code
The Code is being implemented in 2 phases. Phase 1 commenced on 1 July 2025 and Phase 2 will come into effect on 1 October 2025.
Phase 1 covers general conduct and principled obligations, including that intermediaries must:
prioritise the client’s interests over their own or related parties
represent the client’s interests diligently and with due care and skill
not disclose confidential client information unless authorised or legally required
act in accordance with the client’s lawful instructions
deal with the client in good faith
disclose conflicts of interest
not provide services to the client where they or a related party has a material personal interest in the relevant water right.
Phase 1 also introduced requirements for the statutory trust accounting regime, including naming requirements of trust accounts and the contents of trust account statements and auditor’s reports.
Phase 2 introduces the more operational requirements, with a strong focus on disclosure, record-keeping and client protections. The key obligations include:
General information: Before providing services, intermediaries must give clients written information, including information about their services, commission and fees and their legal obligations under the Water Act (including the Code) and the Australian Consumer Law. This information does not need to be repeated if the same information has already been provided in the past 12 months.
Additional information: Intermediaries must also provide service-specific information in writing, including the nature of the service, applicable terms and conditions, and for trades, notification of outcomes within two business days.
Complaints handling: Intermediaries are quired to maintain a documented complaints handling process and comply with specified steps and timeframes for resolving client complaints.
Authority and agency: Intermediaries must hold a written client authority to an application to a water market authority to approve, allow or register the trade or transfer of a water right. Where acting as an agent for a client, intermediaries must also hold a written authority. These authorities must include the information specified in the Code.
Broking water accounts: Intermediaries must use designated broking water accounts to hold water rights on behalf of a client. They are required to maintain client ledgers and provide clients with annual written statements summarising all transactions.
Insurance: Intermediaries must hold professional indemnity insurance that covers the provision of their service. The policy must provide for at least $5 million per claim and $10 million in the annual aggregate, or both of at least $5 million per claim and in the annual aggregate with an automatic right of reinstatement.
Record keeping: Specified records must also be kept for a six-year period. These records include client details, records of client instructions, disclosures of conflicts of interest, written authorities, records of trust account and broking water account statements and ledgers and certificates of insurance.
Enforcement of the Code
The ACCC enforces compliance with the Code. While the ACCC has a range of enforcement options and investigatory powers, the ACCC has confirmed it will take an educational approach in the early stages of the Code, focusing on building awareness and supporting compliance.
The ACCC has also released a range of guidance materials to assist intermediaries in understanding their obligations under the Code.
Preparing for Phase 2 of the Code
With Phase 2 commencing on 1 October 2025, intermediaries should now be actively reviewing their systems, processes, and documentation to ensure compliance. This includes:
updating client engagement letters or client agreements and templates to capture required disclosures and written authorities
implementing or updating complaints handling procedures
reviewing broking account arrangements, ledgers, and reporting systems
ensuring record-keeping systems are in place to securely store all required records for the prescribed six-year period
confirming professional indemnity insurance coverage meets the Code’s thresholds
training staff on these new requirements and obligations.
Please contact us for further information about the Code, or assistance in preparing for the Phase 2 obligations.